International members of the ICC Commission on Taxation and delegates from large Indian corporates and multinationals, including tax professionals, held important discussions today on the investment climate in India.

The discussions included specific tax policies such as Finance Act 2012, Direct Taxes Code, PE litigation and income attribution, and the Goods and Service Tax (GST).

Held against the backdrop of the recently announced changes to India’s taxation policies, the discussions included international investors from 12 countries who expressed concerns about the changes, saying they have had an adverse impact on investment sentiments in India.

During his remarks, Harsh Pati Singhania, President, ICC India, said he hoped that the ICC recommendations resulting from the discussions, which will be sent to the Indian government shortly, will be weighed by Finance Minister Palaniappan Chidambaram in carving out suitable legislative and administrative guidance.

Addressing the delegates, Theo Keijzer, Chairman, ICC Commission on Taxation, highlighted the need for certainty and stability of tax policies to encourage foreign investment in India. ICC’s Commission on Taxation also expressed its desire to work together with the government of India to help shape an optimal investment climate in India.

Mukesh Butani, Vice Chair, ICC Commission on Taxation, said that “the indirect transfer of assets report (Vodafone case) has been referred by the Finance Minister to the Prime Minister’s office and I am confident given India’s desire to attract foreign direct investment, ICC recommendations will be accepted”. Following the recent tax bill levied by India on Vodafone, ICC produced a policy statement in which it stressed that the use of retrospective changes in law creates great uncertainty and concern for investors and should be avoided.

ICC India participated in making wide ranging recommendations on the General Anti Avoidance Rules (GAAR) and Indirect Transfer Retrospective amendments.

While discussing details of Finance Act 2012, participants noted that it takes “two to tango” when negotiating Advance Pricing Arrangements (APAs) and suggested that India takes this into account when entering into bilateral agreements.

The ICC Commission on Taxation has a record of success in helping shaping India’s tax policy. In fact, suggestions made by the Commission have been taken into consideration by the Indian government during the recent legislative reforms.